Paucity of fund hits FG as it can’t pay IOCs $1bn in JV cash call since April
Just as the Federal Government is yet to release the celebrated N350bn, it has not still offset a total of $1.07bn in cash call required for the development of joint venture (JV) assets for the first four months of the year.
The apex government had on presentation of the 2017 budget breakdown told Nigerians that it will release the amount to activate the economy, but more than two weeks, the fund had not been released.
On the JV, Business Hilights observed that the government failed to exit the JV cash call arrangement in January in line with an agreement it reached with the international oil companies (IOCs) in December.
It would be recalled that Nigeria’s oil and gas production structure is split between JV (onshore and in shallow waters) with foreign and local companies and Production Sharing Contracts in deep water offshore.
At the lead is the Nigerian National Petroleum Corporation (NNPC) which owns 55 per cent of the JVs with Shell, and 60 per cent of all the others, and the JVs are jointly funded by the private oil companies and the Federal Government through the corporation.
However, the latest monthly report of the NNPC showed that the corporation paid a total of $1.78bn from January to April this year, as against $2.85bn expected to be paid for the period.
It paid $171.1m in January; $168.2m in February; $267.1m in March; and $142.1m in April from its export proceeds.
The NNPC was expected to pay $712.46m to its joint venture partners monthly for the development of oil and gas assets, in line with the 2016 budget.
According to the Corporation, ““Total export crude oil and gas receipt for the period of April 2016 to April 2017 stood at $2.5bn. Out of which the sum of $2.29bn was transferred to the JV cash call in line with the 2016 approved budget pending the 2017 budget approval and the exit of JV cash call, and the balance of $0.21bn was paid to the Federation Account”.
“However, this JVCC amount falls short of the 2016 appropriated amount of $8.64bn. This is due to the twin effect of production disruption in the Niger Delta and low crude oil prices during the year,” NNPC said.
